Using a seed or sample project in the bidding or proposal phase is a less common and emerging JOC best practice that is designed to meet some of the challenges owners face in Job Order Contracts, and we find ourselves recommending it more and more. The primary advantages of a seed or sample project are:
Confirmation of contractor’s skill in delivery order development; and
Pricing validation.
The first is qualitative and can only be done as part of a best value or prequalification process. The second can be judged more quantitatively, with a number of different possible scoring schemas.
One western state that we worked with was new to JOC and requested a sample job order deliverable as one part of the qualifications submission under Management Plan evaluation category, and established a clear evaluation matrix to score the sample proposals. The RFP read:
“Provide a sample job order proposal for review (no page limit), along with a maximum one page narrative explaining the job order circumstances, methodology, and any line item selections that may require clarification. The proposal could be an actual estimate from a previous job order for any client that you might have served. Ensure that the client name is clearly indicated and provide a reference contact for the client. Include the scope of work, line item estimate and any other in-house design or project documentation that illustrates your job order methodology. Do not include any professional design documents produced by the owner or under separate contract with the owner. The project should be in the range of $100,000-$200,000, and ideally represent multiple trades. Ensure that coefficients and city cost indices are clearly indicated. If proposer does not have JOC experience, a sample small project planning deliverable will be accepted for evaluation.”
The feedback from the selection committee was very positive. It helped them more accurately judge the job order development skillsets of the proposing contractors, and contributed to their own developing understanding of JOC.
Another owner, this time in the transportation sector, included a modified seed project in their evaluation process. In this instance the owner, also new to JOC, really wanted to evaluate the cost competitiveness of JOC with work performed through other means, so they had the contractors prepare a proposal for completed project where their own project costs were known. They were able to both evaluate the thoroughness of the proposing contractors’ scope and solutions compared to their own approach and compare the contractors’ estimates to their own pricing.
A true seed project would actually become the first delivery order under the Job Order Contract, and thus has more “teeth” to it in terms of validating line item pricing. This strategy can be helpful in markets where low-bid procurement requirements have driven coefficients down to an unrealistically-low number. When this happens, contractors are often expecting to utilize inappropriate line items or push the envelope on line item quantities in order to achieve their necessary margins. This can sabotage the relationship of trust that is required for a successful Job Order Contract and lead to lengthy and inefficient negotiations. The seed project can help by aligning the coefficient to the true scope of work. It can shine a light on how well the selection of line items complies with the contract terms, and set a baseline expectation for how line items will be used throughout the contract.
This can be evaluated in a very objective way. A skilled estimator, provided by RSMeans or an independent third-party, can produce a line item estimate that complies with contractual requirements and RSMeans best practices. Deviations, in both line item selection and quantities, can be quantified and a score attached. A minimum compliance with the independent estimate can be established as a prequalification measure, or a technical score can be assigned in a best value selection process, which would be weighted against price/coefficient. Thus, unrealistically-low coefficients that drove “creative” application of line items and quantities will require deviances from a full, fair and accurate estimate that will reduce a respondent’s overall score.
This is an emerging best practice, with lots of options that are still being tested and evaluated. RSMeans can help you craft a seed project strategy to meet your project goals and procure the most qualified and competitive job order contractor.
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